By Steve Schifferes BBC News Online, Washington

Mitch Daniels: Antagonistic towards Congress

President George W Bush has lost another member of his economic team after Budget Director Mitch Daniels resigned to run for governor of Indiana.

Mr Daniels, the last remaining member of the team that drafted the president's economic plan, will leave in 30 days.

Treasury Secretary Paul O'Neill, economic adviser Larry Lindsey, and the head of the council of economic advisers, Glenn Hubbard, have all resigned from office in the last six months.

Mr Bush's plan, which calls for $726bn in tax cuts, principally aimed at the rich, is in some political difficulty in Congress.

Mr Bush said he would "miss him a lot" and called Mr Daniels "a really good watchdog of the people's money".

Budget deficits

As head of the Office of Management and Budget (OMB), Mitch Daniels has had chief responsibility for ensuring that the budget deficit does not get out of control despite the big tax cuts.

Mr Bush has been pushing his tax cut package around the country

He has insisted that the growing budget deficit is "manageable" despite its rapid increase in the last two years.

In an interview on NPR radio on Tuesday, Mr Daniels argued that the main reason for the growing deficit was the recession inherited from the previous administration, as well as the need for extra spending on homeland security and the war on terror.

He did not mention the previous round of tax cuts, which added $1.2 trillion to the deficit.

Mr Mitchell was also in charge of President Bush's supplementary $75bn war budget, which was not presented until after the war in Iraq was under way.

Aggressive stance

Mr Mitchell was known for his aggressive stance towards Congress, whom he accused of having a penchant for spending.

I'm concerned about the deficit, but I'm first and foremost worried about that person looking for a job President Bush

He was particularly incensed about the extra $5bn added to the war appropriation bill to help bail out the airlines.

To keep spending under control, Mr Mitchell undertook a review of the effectiveness of government programmes.

He also decided to end the practice of estimating budget deficits over a 10-year period, saying that it was impossible beyond five years to make accurate estimates.

Critics charged that this move concealed the size of the budget deficit which would be created by the Bush administration's latest tax package.

Mr Daniels said that the turn-around in the budget estimates - which went from a $5 trillion surplus to a $2 trillion deficit in two years - showed how impossible it was to get it right.

Indiana roots

Mr Daniels has long-standing ties with the state of Indiana, where he worked closely with Senator Richard Lugar, chairman of the foreign relations committee.

During his tenure as budget director, he continued to live in Indiana, renting a one-bedroom apartment in Washington.

In the l970s, he worked on the budget crisis faced by New York City, before going on to work for the drug company Eli Lilley.

He is expected to be replaced by his deputy, Clay Johnson - a long-time Bush friend - once the White House is able to clear the nomination with key Congressional leaders.

Budget fight

Analysts say the departure of Mr Daniels increases the chances that Mr Bush will accept a compromise on his tax cut package.

Since the end of the war on Iraq, the president has been vigorously promoting his plan as the best way to get the country out of recession and to create jobs.

In a speech on Monday, Mr Bush said kick-starting economic growth was more important than controlling the country's ballooning deficit.

"I'm concerned about the deficit, but I'm first and foremost worried about that person looking for a job, and so should the United States Congress be worried about people looking for work," he told an audience of business people in Arkansas.

But Mr Bush faces opposition within his own party, where four moderate Republican Senators have stood firm against his plan.

The Senate wants to limit the tax cuts to $350bn, a package Mr Bush has derided as "little bitty".

Voter worries

Mr Bush's comments came as an opinion poll suggested there is only lukewarm support for tax cuts among US voters.

Just 22% said they favoured "a big tax cut" like the one proposed by the White House, according to the Harris poll.

One in five adults (21%) said there should be no change to taxes and 13% said that, far from cutting taxes, Congress ought to reverse recent tax cuts.

Many respondents suggested they were worried the tax cuts would damage the economy by making the government deficit bigger.